Net farm income is forecast to be $91.7 billion in 2012, down $6.3 billion (6.5 percent) from the 2011 forecast, but still the second highest nominal value on record. Net value added is expected to decrease by almost $4.2 billion in 2012 to $145.1 billion. While farm income can vary widely from year to year, the declines in each of the three farm income measures are the smallest decreases recorded since 2000.

Crop receipts are expected to experience a slight increase in 2012. A marginal decline is anticipated for 2012 U.S. livestock sales. Increases in sales of corn, most other feed grains, and peanuts are predicted to offset declines in sales of wheat, hay, vegetables/melons, and fruits/tree nuts.

Total production expenses are forecast to rise $12.5 billion (3.9 percent). This increase is far less than the $35.7-billion (12.5-percent) growth projected in 2011. The growth in crop-related expenses (seeds, fertilizer, pesticides), livestock-related expenses (feed, livestock/poultry purchases), and fuel and oil expenses are all expected to slow following a decade of very rapid expansion.

The value of farm sector assets is expected to rise by 5.7 percent in 2012, due mainly to a projected 5.9-percent increase in the value of farm real estate. Farm sector debt is estimated to increase by 3.8 percent in 2012. Declines are expected in 2012 in both the farm sector's debt-to-asset ratio (to 10.3 percent) and its debt-to-equity ratio (to 11.4 percent). These declines indicate that the farm sector's overall solvency position is expected to continue to improve in 2012.

Median Farm Household Forecast Up in 2011 and 2012

Median total farm household income is expected to increase by 1.8 percent in 2011, to $55,131, and to further increase in 2012 to $55,805. Most farm households earn the majority of their income from off-farm sources and off-farm income is expected to increase by 3.2 percent in 2011, to $51,069, and an additional 3.9 percent in 2012, to $53,037. In 2010, median total farm household income was $54,162, up 3.7 percent from 2009 and 0.8 percent above the 5-year average for 2006-10. Median farm and off-farm incomes were $-2,020 and $49,490, respectively, both higher than in 2009.